Not these GST rates: India Inc pleads govt, requests for a review

Neighbouring countries levy from five to 10 per cent. We cannot afford to have these kind of complex and high GST rates, Dilip Datwani President, Hotel & Restaurant Association of Western India says

A bunch of business sectors have made representations to the government in the past week for a review of rates under the goods and services tax (GST). These include toys, multiplexes, ayurvedic products, paints, detergents, aerated drinks and hotels.

However, Vanaja Sarna, chairperson of the Central Board of Excise and Customs, ruled out a review of these rates on Friday, saying there would be no end to this.

“Industry should know that anything that was finalised in the Council meeting will not be revisited now, barring the six or seven remaining items (where the rates are yet to be decided). Let GST roll out and then these can be taken up,” she said.

Toys, multiplexes, paints, detergents and aerated drinks have been slapped with a 28 per cent GST. Ayurvedic products have been bunched under the 12 per cent bracket versus an earlier expectation of five per cent.

Hotels will have a variable structure, which they excoriate. “Neighbouring countries like Myanmar, Thailand, Singapore, Indonesia and others levy from five to 10 per cent. We cannot afford to have these kind of complex and high GST rates. This is simply not viable,” says Dilip Datwani, president, Hotel & Restaurant Association of Western India.

Leading toy makers are vocal in their displeasure, saying the new rates would impede growth. Ishmeet Singh, country manager for Mattel Inc, maker of Barbie dolls and Hotwheels, says: “The increase in the overall rate and multiple rates within the toy category will certainly impact business. We firmly believe that toys and games come with an intrinsic value that adds to the overall learning and development of children. They are now burdened with unfair and high taxation of up to 28 per cent.”

Adds John Baby, managing director, Funskool: “If GST is to become a tool for economic and social development, the rates should be fixed considering the developmental needs of growing children.”

As for cinema halls, the Multiplex Association of India has asked for a review of the 28 per cent GST on its business. Deepak Asher, president, says: “While entertainment tax is subsumed under GST, the entertainment tax levied by local bodies is out of its purview. In substance, cinemas could end up paying not only a prohibitive 28 per cent GST but possibly a 10-25 per cent local body entertainment tax as well.”

Ajay Bijli, chairman and managing director of PVR, the country’s largest multiplex chain, says a balanced approach would have been ideal for a business dealing with multiple state-level taxes. “We were hoping to be placed in the 12-18 per cent bracket. This way, states where there was no entertainment tax could cope with the higher taxation and those which were heavily taxed would have got significant relief,” he says.

Says Hindustan Unilever, the country’s largest soap and detergent maker: “Laundry detergents and dish washing bars are daily necessity products. To maintain basic hygiene and cleanliness, it is important they get the same treatment as other daily necessity products.”

Ramdev, co-founder of Patanjali Ayurved, has already said the 12 per cent GST on ayurvedic products is not in the interest of the common man.

Paint companies this newspaper spoke to said the 28 per cent GST on the business would dampen demand, as prices will shoot up by at least four to five per cent. “Paints are very basic, needed to protect a home from wear and tear. The (GST) Council has perceived it to be ornamental, putting it in the highest tax slab. Product prices will shoot up as a result,” complained H M Bharuka, managing director, Kansai Nerolac.